it's positioning for court proceedings. Bigger the stake, the bigger the voice; even if it is shares not debt. Then if you have satcon debt and you get a bigger stake of shares, you get a bigger voice in court.
Very good question and I share the same interesting curiosity.
Whatever the supporting base is, it is frequently occurring phenomenal.
All too often, the stock bounces upto several hundred percent from the bottom
particularly within first week of the bankruptcy filing.
I can only speculate that it's a combination of the following:
1. MMs always look for ways to inject biggest pain to traders, and knowing there are huge short positions, they force massive short squeeze to wipe all stop losses and to create panic short covering.
2. That often causes impressive rise in stock price and it shows up in traders scanners.
3. At that point, bunch of day traders jump in which further fuels the price hike to monster level.
4. Now you get second wave of shorts moving in, but it's quite up to the MMs to determine which way they are going to swing the stock.
5. Often, I see MMs squashing this second wave of shorts and continuing to raise the stock price.
6. This is when shorts are giving up on the stock and second wave of new long traders move in thinking this is going to rock.
7. Once there are enough longs, now MMs will crash the stock back down to inject pain to longs.
8. This is why only few quick longs and shorts actually make money and MMs are the ones walking away with consistent profit.
What doesn't make sense is that according to nasdaq there was only 1.2m shares short, which is miniscule compared to how many shares have traded to push the price up from .07 to where it is now. Why all the extra buying? Is the SI as calculated by Nasdaq incorrect because of naked shorts?
That's a pretty stupid observation. A quick pump doesn't drive the stock price up several hundred percent from the bottom. There is something that's happening onsistently for bankruptcy stocks. These things bounce higher than hat shorts think and just when shorts give up and longs get comfortable, he stock sinks again. Since MMs can see the full depth of all orders, sometimes known as level III data, they can do this to clear out protection stop losses. It's a unfair advantage MMs have over individual traders.